As a 24/5 online trading platform, just about anyone – at any time – can try their hand on the forex market. Yet, this doesn’t mean anyone and everyone should be investing in this volatile and risky market. That’s why today, we’re taking a look at the 3 essential characteristics imperative to ensuring consistent and profitable returns from foreign exchange, helping you to decide whether the non-stop, busy world of forex is really for you.
As is the nature of any trading market, there are going to be inevitable ups and downs along the way – the monumental highs of a big win can just as easily be contrasted by the devastating lows of a significant loss. As such, an innate psychological ability to remain composed, maintaining emotional and tactical rationale at all times, is key. From assertiveness and logical decision making in high-pressure environments to composure during highly emotional periods, a self-controlled inner strength will aid any trader in success.
What’s more, the profitable trader is able to remain consistently focused for prolonged periods of time. From the daily 6 o’clock news to the steady stream of social media articles, there’s an absolute plethora of information out there that could influence your next trade, so being able to keep one ear to the ground with one eye on the market is a skill that is sure to hold value in your journey to trading success.
An understanding of the market
Though this may seem obvious, the ease of accessibility to the forex market means just about anyone can invest in currency. Get ahead of this competition by ensuring you have a thorough understanding of the fundamentals of forex, as this will allow you to make informed decisions based on market activity and strategy.
You can conduct your research in a way that works best for you, whether that be scouring informational resources at the local library or reading the latest industry blogs. Either way, with all the specialist jargon and technical strategy out there, it can all get a bit confusing – if this is the case, consider learning more about forex trading from specialist classes and courses. Not only will it help to have everything explained by someone in the know, but you may even get some strategy tips and tricks to help push you in the right direction.
A refined analytical and mathematical ability
As an investor in foreign currency, you’re going to be dealing with a lot of numbers, charts and data. Subsequently, a defined competence in maths and analysis is crucial.
Forex trading deals with currency pairings, presented as two numbers side by side. So having a solid knowledge of mental arithmetic will aid you in decoding these pairings, working out areas of potential profit and therefore allowing you to place successful trades. Likewise, the ability to analyse and interpret data quickly – whether that be from indicators, charts or patterns – will help you identify trading opportunities and appropriately refine your own strategy and approach.
Just like any other investment market, forex should only be traded by those with proper knowledge of the industry and the right set of skills. Before diving head-first into the world of forex trading, ensure you’ve grasped these three core characteristics – once you have, you can confidently begin your journey down a prosperous path that could lead you to trading success.
John James is a content writer for Learn To Trade, the foreign exchange education and learning specialists – offering a range of training courses to help people understand the currency trading market, as well as its opportunities and risks.